FIH, a contract maker of phones for Nokia Oyj (NOK1V) and Sony
Ericsson, added 39 percent to HK$3.80 as of 2:20 p.m. in Hong
Kong, headed for the biggest gain since it began trading in
February 2005. About 200 million shares traded, more than 17
times the three-month moving average, according to data compiled
by Bloomberg.

A transfer of some orders for iPhones from Hon Hai
Precision Industry Co. (2317), the majority owner of FIH, and a new
smartphone for Amazon will help FIH boost output and reverse a
first-half loss that drove down shares, the two brokerages wrote
in reports. Amazon is working with FIH to develop its first
smartphone, Bloomberg News reported in July.

“These new customers (Apple and Amazon) should help lift
utilization and hence return FIH to profit,” Taipei-based HSBC
analysts Yolanda Wang and Joyce Chen wrote in a report today,
raising their recommendation to overweight from underweight.
Revenue will rise 41 percent in fiscal 2013 while operating
margin will improve to 2.5 percent from -5.5 percent, Taipei-
based HSBC

Hon Hai Precision, the world’s largest contract
manufacturer of electronics and the Taipei-based flagship of the
Foxconn Technology Group, owns 69.5 percent of Foxconn
International through its Foxconn Far East Ltd. unit. Its stock
lost 1.2 percent to NT$87.50 at the 1:30 p.m. close of trading
in Taipei today.

FIH iPhones

Foxconn International is unaware of any reason for today’s
share price movement, it said in a Hong Kong exchange filing
today. Spokesman Vincent Tong wasn’t available at his office and
didn’t immediately reply to an e-mail from Bloomberg News.

Foxconn International, with major clients including Nokia,
Motorola Mobility Holdings Inc. and Sony Ericsson, will start
producing iPhones late this year or early next year, Daiwa
Securities Group Inc. Taipei-based analyst Birdy Lu wrote in an
Oct. 10 report. The stock climbed 17 percent on Oct. 11.

Last month’s share price surge, spurred by expectations of
iPhone orders, may be “unwarranted,” Goldman Sachs Group Inc.
analyst Robert Yen wrote at the time. Hon Hai is unlikely to
give iPhone orders to FIH, Deutsche Bank AG’s William Yang
wrote.

‘Golden Opportunity’

“FIH has been the poster child for the decline of
traditional handset brands -- Nokia, Motorola and Sony Ericsson,
which together accounted for 90 percent of FIH’s sales back in
2007,” Citigroup Taipei-based analysts Kevin Chang and Jonathan Gu wrote in a Nov. 2 report. Hon Hai transferred some iPhone
orders to FIH starting last month, they wrote.

“With Internet/software companies getting into the
smartphone space, FIH now has a golden opportunity to resume
growth,” wrote Chang and Gu, who changed their rating to buy
from neutral and raised their price target by 45 percent to
HK$5.80.

“We note that Amazon, Google, Microsoft, Xiaomi, Baidu,
Tencent are all trying to launch smartphones and none has in-
house manufacturing.”

Today’s climb stems FIH’s decline this year to 26 percent
following a 7.7 percent drop last year and 40 percent in 2010.
Its six-month loss widened 12-fold to $226 million for the
period ending June 30, according to data compiled by Bloomberg.